The Clorox Company
) came up with lower-than-expected earnings and sales comparisons
for the third-quarter of fiscal 2013. The company's earnings of
$1.00 per share missed the Zacks Consensus Estimate of $1.06 and
fell nearly 3.8% from the year-ago quarter's adjusted earnings of
Quarterly earnings of this Zacks Rank #3 (Hold) company were
primarily affected by unfavorable weather conditions and adverse
foreign currency exchange rates along with increased advertising
and promotional costs, which were partially offset by lower
selling and administrative expenses and reduced spending for
information technology (IT) systems.
Net sales inched up 1.0% year over year to $1,413 million from
$1,401 million in the year-ago quarter. Total volume remained
flat year over year. However, total revenue came below the Zacks
Consensus Estimate of $1,436 million. The company's quarterly net
sales were negatively impacted by currency devaluation in
Argentina and Venezuela and unfavorable weather conditions
resulting in double-digit decline in sales and volume in the U.S.
Revenue by Segment
Sales in the
segment inched up 2% to $454 million, primarily due to 1% volume
growth and higher prices. During the quarter, the segment
witnessed volume growth in its Professional Products business
while volume at Laundry business declined.
sales inched down 1% to $413 million primarily due to 4% decline
in volume. Volumes in the quarter were adversely impacted by
double-digit decline in charcoal resulting from cold weather in
the U.S. in March and volume decline in Cat Litter products.
Sales at the
segment hiked 2% to $245 million, primarily due to an increase of
1% in volume. Volume growth in the Burt's Bees and Food
businesses was responsible for the improvement.
business segment, Clorox's sales improved 2% to $301 million,
benefiting from price and volume increases.
Costs and Margins
Clorox's gross margin contracted 20 basis points (bps) to
42.1% from 42.3% in the year-ago quarter. The year-over-year
decline in gross margin was primarily due to margin contraction
in International business and reduced charcoal sales.
The company's operating income stood at $202 million compared
with $198 million in the third quarter of fiscal 2012. Operating
margin improved 20 bps to 14.3% driven primarily by the company's
effective cost management.
Balance Sheet and Cash Flow
Clorox ended the quarter with cash and cash equivalents of
$423 million and long-term debt of $2,169 million. During the
first nine months of fiscal 2013, the company generated $486
million net cash from operations, exhibiting an increase of $153
million from the year-ago period.
Battered by lower-than-expected quarterly performance, Clorox
lowered its sales growth forecast to 3%-4% for fiscal 2013 from
3%-5% forecasted earlier, on account of reduced charcoal sales
due to adverse weather conditions.
The company, which competes with
Church & Dwight Company Inc.
Proctor & Gamble Company
) continues to expect operating margin to expand by 25 to 50
basis points in fiscal 2013, on the back of strong cost savings,
the benefit of price increases and flat commodity costs
forecasts. Further, the company still anticipates annual earnings
of $4.25-$4.35 per share in fiscal 2013.
Looking ahead, Clorox initiated fiscal 2014 outlook with sales
growth forecast of 2%-4% while earnings are expected to range
from $4.55 - $4.70 per share. Operating margin for the fiscal is
likely to expand 25 to 50 bps.
Headquartered in Oakland, CA, Clorox is primarily engaged in
the production, marketing and sale of consumer products in the
U.S. and international markets. The company sells its products
primarily through mass merchandisers, grocery stores and other
retail outlets. The company manufactures products in more than 24
countries and markets them in more than 100 countries.
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